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[2014] ZAWCHC 110
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Law Society of the Cape of Good Hope v Schoeman (15586/13) [2014] ZAWCHC 110 (29 July 2014)
THE
HIGH COURT OF SOUTH AFRICA
(WESTERN
CAPE DIVISON, CAPE TOWN)
Case
no: 15586/13
In the matter between:
THE LAW
SOCIETY OF
Applicant
THE CAPE OF GOOD
HOPE
And
FRANS
JOHANNES SCHOEMAN
Respondent
Heard: 25 April 2014
Delivered: 29 July
2014
JUDGMENT
NDITA;
J
[1]
This is an application by the Law Society of the Cape of Good Hope
for an order striking the name
of the respondent from the roll of
attorneys and for relief ancillary thereto. The applicant further
requests that the respondent
be ordered to pay costs of this
application on attorney and client scale. The basis for the
application is mainly that the respondent
is not a fit and proper
person to remain on the roll of attorneys because he had
misappropriated trust monies.
[2]
The factual background which gave rise to this application can be
briefly stated as follows:
The respondent was admitted as an attorney
of the Free State High Court on 08 July 1993 and practised as a
professional assistant
from 1999 to 2000. From 15 March 2001 to date,
he practised as a partner at Joubert Schoeman Attorneys and later
during the same
year, on 14 August 2001, he was enrolled as an
attorney of this court. The present proceedings arose when Ms Helen
Joubert, also
a partner in the same firm of attorneys, approached the
applicant on 16 March 2012 and reported that there were certain
irregularities
involving the handling of trust accounts within the
firm. She and the respondent were equal partners in the firm and had
been intimately
involved for approximately twelve years. Ms
Joubert was responsible for the writing up of the book of accounts.
During 2007,
she noticed that the respondent would after consuming
alcohol during the night, transfer various amounts from the firm’s
trust account to his personal credit and cheque accounts. The
respondent would thereafter attend the Grandwest Casino and gamble.
He would however, transfer the funds back to the trust account on the
same day and at other times, a week later. According to Ms
Joubert,
the transfer of trust monies usually occurred when they were
experiencing difficulties in their personal relationship.
She was
unsure of the exact figure of the respondent’s losses or
winnings from gambling but was aware of the fact that the
respondent
had accumulated debt to the amount of R3 million. At the time of her
reporting the problems besetting the law firm,
the trust account had
a shortfall of approximately R100 000, 00. The respondent had
his own code for accessing the Internet
banking platform but may well
have used Ms Joubert’s code as he was familiar with it.
[3]
Pursuant to the report made to the applicant, and at a meeting held
on 16 March 2012 with
it, Ms Joubert undertook to take control of the
finances of the practice, to the exclusion of the respondent. The
respondent was
telephonically advised of the new arrangement and
agreed to the terms thereof. A further meeting was held on 22
March 2012,
and it transpired that the shortfall in the trust account
was in the amount of R90 000,00 which he had transferred to his
account on 8 March 2012. However, by 23 March 2012 the respondent had
paid back to the trust account the aforementioned amount of
R90 000,00. The following is a schedule of the amounts
transferred by the respondent from the trust account via internet
banking into his business account, credit card accounts as well as
his personal cheque account:
8
July – 10 July 2007
R300
000,00
10
July -14 July 2007
R350
000,00
13
February – 15 February 2010
R150
000,00
14
October - 25 October 2010
R38
000,00
02
November – 03 November 2011
R100
000,00
17
November 2011 – 18 November 2011
R70
000,00
16
Janauary 2012
R59
000,00
27
February – 01 March 2012
R100
000,00
04
March – 05 March 2012
R70
000,00
08
March – 23 March 2012
R90
000,00
TOTAL
R1
327 000,00
[4]
In all the instances, the monies transferred from the trust account
were returned into the
trust either on the same day or within a short
period. When confronted with these transgressions, the
respondent admitted
the irregular transfers but explained that he was
during the relevant period experiencing emotional turmoil and was
being treated
by a psychiatrist, Dr Govender, for a Major Depressive
Disorder and Post Traumatic Stress Disorder.
[5]
The respondent in his affidavit opposing the striking off, averred
that he never intended
to steal the funds he misappropriated and
always paid back the amounts transferred to his accounts.
According
to the respondent, he had not manifested character defects
and a lack of integrity because the moral lapse on his side was as a
result of the trauma he had to endure. To this end, the respondent
gave an outline of his relationship with Mr Joubert and the
circumstances underlying the trauma. He stated that he was involved
in an intimate relationship with Ms Joubert from 2000 to 2012.
Two
children, aged 9 and 7, were born out of the relationship.
According to the respondent, the transgressions involving
misappropriation of trust funds are inextricably linked to the
periods of exceptional strife in his relationship with Ms Joubert,
caused, inter alia, by her abuse of alcohol. They were aimed at
getting Ms Joubert’s attention as she hated gambling intensely.
In addition, the transferring of the trust funds was similarly
intended to irritate her. This, according to the respondent is clear
from the fact that the funds would be repaid within a short period
after transfer. To this end, the respondent averred that he
even
inserted on the transfer notification, the name of a man (also an
attorney) who had a relationship with Ms Joubert.
This he did
in retaliation and was fully aware of the fact that she would be
upset by his conduct. The respondent denied that he
was under immense
financial pressure. He stated that at all times he had sufficient
funds to cover the amount of any withdrawal
from the trust account.
[6]
The respondent annexed to his opposing affidavit a report compiled
his psychiatrist, Dr
Ravi Govender, wherein the latter confirms that
the respondent’s father, deceased in 2009, was also diagnosed
with a Major
Depressive Disorder. According to Dr Govender the
condition is hereditary. The report reflects that the respondent
first consulted
with Dr Govender’s practice in 2007 and was
diagnosed with a Major Depression by Professor Oosthuisen, who had
prescribed
anti-depressant medication with sleeping tablets.
According to the report Dr Govender had 8 consultations with the
respondent commencing
on 8 December 2011 to 27 January 2014. At
that time, the respondent was severely depressed and had two failed
suicide attempts.
This he did by taking an overdose of the prescribed
sleeping pills and slitting his wrists. Dr Govender explained that it
became
abundantly clear to him that the respondent was suffering from
a Post-Traumatic Stress Disorder (“PTSD”). The condition
is caused by a wide range of traumatic events such as the witnessing
of a death, serious injury where the individual felt intense
fear or
horror or helplessness. According to Dr Govender, the respondent’s
relationship with Ms Joubert was fraught with
problems over a lengthy
period of time, amongst which was alcohol abuse on her part as well
as her involvement in three romantic
relationships during the
subsistence of her relationship with the respondent. He states that
Ms Joubert’s infidelity had
a severe psychological impact on
the respondent resulting in the suicide attempts earlier alluded to.
In addition, the respondent
reported to him that as far back as 1994,
while he was still married, he experienced an extremely traumatic
event when he caught
his then wife “red handed” in bed
with a fellow colleague. Notwithstanding the diagnosis, the
respondent is according
to Govender responding well to treatment. In
the report, the psychiatrist confirms that the respondent revealed to
him that he
embarked on the conduct which forms the subject matter of
this application in order to shock Ms Joubert as she was responsible
for the writing up of the books of the law firm and the transferring
of the money from the trust account would force her to make
journal
entries to cover the irregularities perpetrated by the respondent.
[7]
Based on the facts outlined above, the applicant seeks the striking
off of the respondent
from the roll of attorneys. Section 22 (1) of
the Attorney’s Act provides as follows:
“
Any person
who has been admitted and enrolled as an attorney may on application
by the society concerned be struck from the roll
or suspended from
practice by the court within the jurisdiction of which he practices
if he, in the discretion of the court, is
not a fit and proper
person.”
In
Jasat v Natal Law Society 200(3) SA 44 (SCA) at 51C-G the court
reiterated that s 22(1) contemplates that a court in exercising
its
discretion must first decide whether the alleged offending conduct
has been established on a preponderance of probabilities.
This in
essence is a factual inquiry. The second inquiry is whether, as
stated in s 22(1) (d), the person is in the discretion
of the court a
fit and proper person to continue practising as an attorney. This
involves a weighing up the conduct of the conduct
complained of
against the conduct expected of an attorney, and to this extent, a
value judgment. The third inquiry is whether in
all the circumstances
the person in question is to be removed from the roll of attorneys or
whether an order suspending him from
practice will suffice.
[8]
I now turn to determine whether the offending conduct has been
established on a preponderance
of probabilities. It is clear from the
respondent’s opposing affidavit that it is not in dispute that
he transferred funds
from the trust account to his personal accounts.
That he returned the funds so transferred within a short space of
time does not
detract from the fact that the irregularities were
committed. Without further ado, it must be found that the offending
conduct
has been established on a balance of probabilities.
[9]
In the light of the findings I have made, the next step entails an
assessment of whether
the respondent is a fit and proper person to
continue practising as an attorney. The applicant argued that the
respondent administered
trust funds in a reckless and cavalier manner
and that clearly demonstrated that he had manifested character
defects and lack of
integrity. According to the applicant, the
respondent is not only guilty of dishonourable and unworthy conduct;
he has also brought
the profession in disrepute and is thus not fit
to practise as an attorney. The applicant strenuously contended that
the misappropriation
of trust funds strikes at the very heart of the
respondent’s duties as an officer of Court. In addition, so
argued the applicant,
an attorney who misappropriates trust monies
demonstrates a character defect that renders him/her unfit to remain
on the roll of
attorneys as he poses an unacceptable risk to the
public and to the administration of justice. That he had sufficient
funds to
cover the funds withdrawn from the trust account is not a
defence to the charge levelled against him. The applicant, relying on
Cape Law Society v Parker
2000 (1) SA 582
at 587 C-D, argued that the
respondent is not a fit and proper person to remain on the roll of
attorneys. In Parker, the court
explained that:
“
. . . the
availability of a liquid fund may in appropriate circumstances
constitute a defence to the common law crime of theft insofar
as it
may indicate an absence of mens rea. It is not an answer to or an
exculpation of the particular form constituted by the
misappropriation by the attorney of trust funds, more particularly in
that an attorney could not be heard to say when he misappropriated
trust monies that he had a right to do so or that the trust client,
had he been consulted, would have consented to the misappropriation.”
[10]
The respondent on the other hand states that while he admittedly made
withdrawals from the trust account,
he had no intention of stealing
the funds and always intended, and did pay everything back. Although
he acknowledges that the transgressions
are of a serious nature, he
says that no prejudice had been suffered by any of the affected trust
clients as the money was timeously
returned to the trust account. He
states that the despite the applicant being aware of his
transgressions for two years, it still
allowed him to continue
practicing without interdicting him. In his opinion, the failure to
interdict him clearly demonstrates
that the applicant did not
consider him unfit to practice as an attorney. In his own words he
says:
“
The
applicant clearly did not regard me as unfit for practice for the
past two years, and it is therefore unclear why it is taking
the
stance now that I should be struck off the roll.”
[11]
It is fitting to restate the standard and degree of conduct expected
of an attorney. The guidelines
are succinctly laid out in Law
Society, Transvaal v Matthews
1989 (4) SA 389
at 395 F-396A as
follows:
“
The attorney
is a person from whom the highest standards are exacted by the
profession and this Court. If an attorney wishes to
digress from that
standard he may do so but he must then first cast a side his
profession by resigning and then pursue his chosen
course. In this
regard the standards are admirably dealt with in the founding
affidavit as follows:
‘
An
attorney is a professional man whose independence and freedom in the
conduct of his practice are recognised and preserved. Within
the
limits of the law and the rules of professional conduct, an attorney
conducts, and in fact should so conduct, his practice
with a high
degree of independence. The profession itself is not a mere calling
or occupation by which a person earns a living.
An attorney is a
member of a learned, respected and honourable profession and, by
entering it, he pledges himself with total and
unquestionable
integrity to society at large, to the courts and to the profession .
. . only the very highest standard of conduct
and repute and good
faith are consistent with membership of the profession which can
indeed only function effectively if it inspires
the unconditional
confidence and trust of the public. The image and standing of the
profession are judged by the conduct and reputation
of all of its
members and, to maintain this confidence and trust, all members of
the profession must exhibit the qualities set
out above at all times.
The attorneys’ profession can
only fulfil its obligations to the community and comply with its role
in the administration
of justice in the land if it inspires and
maintains the unconditional confidence of the community and if its
members devote their
absolute integrity to the conduct of their
profession and to the fulfilment of all the requirements demanded of
the profession
and its members.”
It
follows that the respondent’s misappropriation of trust funds
renders him unfit and improper to practise as an attorney.
[12]
I now turn to consider the appropriate sanction. As earlier alluded
to, this court is enjoined to inquire
into whether in all the
circumstances the respondent is to be removed from the roll of
attorneys or whether an order suspending
him from practice will
suffice. Recently, Mthiyane JA in Hepple v Law Society of the
Northern Provinces (507/2013)
[2014] ZASCA 75
(29 May 2014) restated
the approaching to striking off as follows
“
[9] In
considering whether a case has been made out against an
attorney sought to be struck from the roll it is necessary
to bear in
mind that the evidence presented by the law society is not to be
treated as though one was dealing with ‘a criminal
case’
or ‘an ordinary civil case’. The proceedings in
applications to strike the name of attorneys from the roll
are not
ordinary civil proceedings. They are proceedings of a disciplinary
nature and are sui generis. It follows therefore that
where
allegations and evidence are presented against an attorney they
cannot be met with mere denials by the attorney concerned.
If
allegations are made by the law society and underlying documents are
provided which form the basis of the allegations, they
cannot simply
be brushed aside; the attorneys are expected to respond meaningfully
to them and to furnish a proper explanation
of the financial
discrepancies as their failure to do so may count against them.”
The
guidelines in assessing the appropriate sanction are set out in
Summerlely v Law Society of Northern Province
2006 (5) SA 613
SCA
wherein Brand JA cautioned that sight should not be lost of the fact
that the removal from the roll of an attorney constitutes
a severe
penalty and stated thus:
“
[19]
Before imposing this severe penalty, the Court should therefore be
satisfied that the lesser stricture of suspension
from practice will
not achieve the objectives of the Court’s supervisory powers
over the conduct of attorneys and, secondly,
to protect the public,
particularly where trust funds are concerned.”
It
is also well established that where a court finds dishonesty, there
must be exceptional circumstances before it will order a
suspension
rather than a removal. (See Malan and Another v Law Society, Northen
Provinces
2009 91) SA 216
(SCA) at 231 G-I).
[13]
The sanction to be imposed upon the respondent is primarily for the
protection of members of the public.
In assessing whether the
respondent is a fit and proper person to practice as an attorney, it
must accepted that his misconduct
per se, does not necessarily
mean that as a matter of course, the severest sanction must be
imposed. The court must consider
factors such as the nature of the
conduct complained of, the extent to which it reflects upon the
person’s character or shows
him to be unworthy to remain in the
ranks of an honourable profession and the likelihood or otherwise
repetition of such conduct
and the need to protect the public. (See
Jasat v Natal Law Society
2000 (3) SA 44
SCA). These factors must be
weighed against the conduct and standard expected of an attorney,
taking into account all relevant
factors. The respondent placed the
following exceptional circumstances before the court, justifying why
he should be suspended
rather than struck off the roll:
1.
He has been practising as an attorney for 21 years
and throughout this period, no similar complaint was recorded against
him. Neither
had he been found guilty of any misconduct.
2.
He suffered from depression and severe Post
Traumatic Stress Disorder, which caused him to act foolishly in the
hope of salvaging
her relationship with Ms Joubert and ultimately
preserving the family unit.
3.
He never intended to steal the trust funds and had
no need to so as he had enough funds of his own to cover his
expenses. To this
end, he annexed to his papers, a personal income
and balance sheet reflecting that he had sufficient funds. In
addition the funds
were paid back shortly after each withdrawal.
4.
He is undergoing counselling and is taking
medication to deal with and control his depression and PTSD.
5.
He expressed remorse and undertook not to conduct
himself in such a manner ever again.
[14]
I have already indicated earlier in this judgment that that the
respondent did not intend to steal
the trust funds does not assist
him as misappropriation of trust funds constitutes the worst sin that
an attorney can commit, irrespective
of the intention. (See Parker,
supra and Law Society of the Cape of GoodHope v Budricks 2003 (2)
SA11 at 17 I-J). Similarly, that
the applicant allowed the respondent
to practise as an attorney for two years whilst being aware of the
misconduct cannot be considered
to be favourable to the respondent.
Of course, it is incumbent on the applicant to act promptly when it
has information of a misconduct
by a practitioner, and failure to do
so as well as deprecated delays which have not been explained is
unacceptable. (See Law Society
of the Cape of Goodhope v Zietsman
[2010] ZAWCHC 219).
I must reiterate that the prolonged failure by
the applicant to act promptly prejudices the public which may put its
trust in an
attorney, who may otherwise be unworthy of such trust.
The applicant is entrusted with a duty to regulate the conduct of
attorneys
and where any aspersions are cast on attorney’s
integrity and worthiness, the public is entitled to expect that the
applicant
will timeously take the steps necessary to protect it. In
the matter at hand, there is no explanation as to why the applicant
allowed
the respondent to practise for two years whilst being aware
of his misappropriation of trust funds.
[15]
Ordinarily, the misappropriation of trust funds points towards a
character that is inherently flawed,
more so in circumstances where
it was not a once off occurrence, but took place over a long period,
as is the case in casu. But
the circumstances of this matter are not
ordinary. What is puzzling is that it is clear from the financial
statements attached
by the respondent to these papers that he is
financially stable and there therefore was no need for him to
embezzle trust funds.
That said, it not uncommon for people who have
more to want more. However, the respondent’s modus operandi of
returning the
money to the trust account as quickly as he took it,
suggests that there was more to his conduct. The respondent’s
conduct
must be assessed having in mind the uncontested depressive
emotional circumstances resulting from his failed relationship with
Ms Joubert. In my view, this lends credence to his version that
he was punishing Ms Joubert, who was responsible for the books
of the
practice. This view is supported by the report by his psychiatrist
that he was suffering from depression and PTSD. If one
accepts that
the respondent’s conduct was influenced by his prevailing
family circumstances, it follows that it cannot be
said that his
character is so inherently flawed that if he is at some stage allowed
to return to practice, he is likely to repeat
the conduct. He states
that he has practiced as an attorney for 21 years and no disciplinary
proceedings were ever held against
him by the applicant. His
expression of contrition and unequivocal acknowledgement that his
conduct fell short of the high standards
expected of an attorney, to
some degree show that he fully comprehends the extent of the
magnitude of his transgressions. I am
alive to the fact that the
amount misappropriated by the respondent is a huge amount, and that
it has all been repaid.
I consider these
factors exceptional enough to ward off the strictest sanction of
striking him off the roll of attorneys. In my
view a suspension from
practising as an attorney for a period of time will suffice.
[16]
I now turn to the question of costs. The applicant has in both the
notice of motion and founding affidavit
asked for costs on attorney
and client scale. I am inclined to order the respondent to pay
costs on the requested basis as
in my view his conduct shows
dishonesty in performing his duties and causes harm to the legal
profession.
[17]
Accordingly the following order is issued:
1.
The
respondent is suspended from practising as an attorney of this court
for a period of 12 months, with effect from the date of
this order.
2.
upon
the expiry of the aforementioned period of suspension:
(a)
The respondent shall be permitted to practise as a
professional assistant or an associate and shall not practise for his
own account
or as a partner for a further period of three years; and
(b)
The respondent’s undertaking given to the
Law Society that he will not administer a firm of attorneys’
books of account
or trust account, is to remain in place for the said
further period of three years.
3.
The
respondent is to pay the applicant’s costs of the application
on the scale as between attorney and client.
NDITA;
J
I
agree.
FOURIE;
J